More than two-thirds of European websites offering consumer credit contracts are falling short of standards required under EU law, according to a widespread pan-European investigation conducted in September last year.
National enforcement authorities conducted a 'sweep' of more than 500 websites across the 27 member states plus Norway and Iceland and flagged up 70% for further investigation.
The main problems lay in advertising failing to include standard information, key information such as interest rates on repayments being omitted from the sites, and the misleading presentation of costs.
The national enforcement authorities will now contact the financial institutions and credit intermediaries involved about the suspected irregularities and ask them to explain themselves or to take corrective action.
On-line credit market is huge and growing
The sweep operation focused on how business is applying the Consumer Credit Directive – recently transposed in the member states – which aims to make it easier for consumers to understand and compare credit offers.
The European on-line credit market is huge and growing, in 2010 financial institutions in the eurozone had more than €600 billion outstanding consumer credit on their books.
Almost half (46%) of websites checked were lacking information required under the Consumer Credit Directive.
The directive requires websites to offer annual percentage rates as standard information – deemed essential to enable consumers to compare the value of offers – and details of any further charges and of the services to which they relate.
A fifth of all the websites checked contained more seriously misleading presentations of costs. This might include the credit payment being displayed in such a way to dupe the consumer, for example including hidden insurance charges as part of the overall cost without making any effort to explain this.
Offending websites could face closure
Consumer group BEUC said that member states must step up their supervision of websites offering credit. The group’s director-general, Monique Goyens, said: “Laws to protect consumers do not have any effect when they are not properly implemented. Unfortunately, BEUC findings clearly show an intolerable lack of financial supervision in too many member states.”
Websites which fail to account for their behaviour to national authorities over the next few months will be subject to legal action, fines, or possible closure. The nature of the sanctions depends on the legislative framework in each member state, however.
The national enforcement authorities will report back to the Commission by autumn this year, and the Commission will then report on the results.